Vietnam halves car registration fees to boost sales
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Vietnam has cut car registration fees in half for locally-made or assembled cars as authorities hope against hope that the move will boost sales.
The 6-month cut takes effect July 1 and the fees will return to normal starting Jan. 1, according to a government decree issued Wednesday.
Registration fees are calculated based on car prices in each locality. The rates are 12% in Hanoi and Hai Phong, and 10% in HCMC.
Vietnam issued the same 50% cut for six months in 2020 and 2022 to boost consumption. The move caused sales to double in both cases.
The Ministry of Finance, however, said earlier that the cut might not be as effective this time since the economy is seeing a strong decline in industrial activity and exports amid high inflation and low GDP growth.
In the first five months, 113,500 auto units were sold, a 36% plunge year-on-year, according to the Vietnam Automobile Manufacturers Association.
Questions & Answers
Q.Which car sales are expected to benefit from the reduced registration fees?
Which car sales are expected to benefit from the reduced registration fees?
The fee reduction applies only to cars that are made or assembled within Vietnam. Imported vehicles will not receive the benefit, meaning only locally produced automobiles are targeted by the government's incentive.
Q.What is the expected duration of this reduction in registration fees?
What is the expected duration of this reduction in registration fees?
The reduced registration fees are set to be in effect for a six-month period. They will commence on July 1 and are scheduled to revert to their normal rates from January 1 of the following year.
Q.What were the results of previous registration fee cuts in Vietnam?
What were the results of previous registration fee cuts in Vietnam?
Similar 50% cuts were implemented for six months in both 2020 and 2022. On both occasions, these measures successfully doubled car sales, indicating their past effectiveness in stimulating the market.
Q.Why might this fee reduction be less effective than previous attempts?
Why might this fee reduction be less effective than previous attempts?
The Ministry of Finance expressed concerns due to the current economic climate. A strong decline in industrial activity and exports, alongside high inflation and low GDP growth, could hinder the policy's impact this time.
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